Saturday, May 14, 2011

Confusing title aside, the first of what will likely be many meetings with AT&T, T-Mobile, other companies, and congress took place. Needless to say, it was just fucking hilarious. Most of the proceedings can be read on tmonews (AT&T Senate meeting).

Try as they might, AT&T and T-Mobile's CEOs couldn't sneak in an inch on the first round of senators. Some highlights I thought were fun were:

* AT&T claims merger will help rural areas with better converage - Franken (comedian who used to be on SNL) launched this one out of the park by saying that AT&T advertises nationally, not locally so why should the deal be looked at as such. Totally valid but not a blockbuster point. Building rurally tower-wise is more of an issue with the land owners. Many rural people don't want towers in their backyard because they are visible like a sore thumb unlike urban areas where towers can be concealed. Plus, I've rarely had issues with coverage in rural areas. I didn't have high speed data, but I was able to make calls and texts which are really the primary functions of the phone. This merger is more about data than coverage, after all AT&T says they cover 97% of Americans.

* Dan Hesse, CEO of Sprint tells the committee that this merger will likely spell the end of Sprint through a Verizon merger...potentially - Very true. Both AT&T and Verizon would cover 82% of Americans if this deal passes. Sprint will have about only a third of the customers that the Big Two would. Eventually, Sprint would no longer be able to compete as the companies now have basically buyout other companies until there is more spectrum up for sale. Sprint would find themselves merging with Verizon since they use the same technology for their 3G network and have loads of spectrum to use. Of course, this could be a bit of fear-mongering, but is a very realistic future.

* AT&T continues to ignore T-Mobile's position as a competitor - AT&T is still saying that the smaller companies (with less than a tenth of AT&T's customer base) are competitors while almost refusing to admit that T-Mobile is one. Senator Kohl finally blurted out that they were competitors, asking them to just admit it. This is something I don't fully understand. I fail to see how AT&T thinks all of these regulators and politicians are simply going to believe that a company with 33 million customers isn't a competitor to AT&T. T-Mobile has maintained consistent build out of their network and generate excellent data speeds at affordable prices. My only guess is that AT&T has to downplay T-Mobile in order to convince everybody that T-Mobile needs them. Truthfully, they don't. HSPA+ and HSPA Evolved have the capabilities to reach 680 Mbps. Not as fast as LTE, but still very good with minimal impact on battery life. Just because T-Mobile may not have the capital to upgrade to LTE doesn't mean they are out of the game.

* The deal is worth a total of six billion dollars if it fails - This is the three billion dollars in money, two billion in spectrum, and one billion in roaming charges that T-Mobile gets if the deal fails. Certainly I would like to believe that T-Mobile is just playing AT&T, but the truth is more than likely this is the limit in how much AT&T will push in bribes, lobbying, and advertising to make this deal look good to politicians and officials. Technically the actual value of T-Mobile is only about half as much as AT&T is paying. It shows how desperate AT&T is for TMo's spectrum. I doubt AT&T even cares about the customers so much as it is in keeping up with Verizon that already has their 4G network building out rapidly. Even Clearwire, the company that Sprint rents spectrum from, has gone on to say that switching to LTE is nothing more than having the proper phone and a software upgrade for their towers. AT&T runs the risk of falling behind and losing customers with it.

There are plenty more of interesting tidbits, but these are what I find most interesting. As more of these bits of information come out, I realize how badly AT&T wants T-Mobile's spectrum. The reality is that AT&T's spectrum issues are not quantity, but quality. They own spectrum at tons of frequencies, but not many that are close to each other. This results in dropped calls, data loss, etc. While T-Mobile on the other hand, pooled their spectrum close together (mostly in the 1700 MHz band range for 3G/4G) which is why their network suffers a bit in buildings but has far fewer dropped calls and issues.

The thing is, AT&T wants to use the 1700 MHz spectrum from T-Mobile to build their LTE network. While it's common knowledge now that LTE is the future of cellular technology, why waste time reconfiguring an entire network when they could just get pentaband phones and build on top of T-Mobile's existing network? It would be cheaper, faster to do, and wouldn't alienate the T-Mobile customers that swing over after the merger from having their smartphones rendered useless. AT&T sure isn't thinking this through. I only hope the deal gets rejected.